Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession

Area of Science:

• Labor Economics
• Immigration Studies
• Urban Economics

Background:

• Local labor demand shocks disproportionately affect low-skilled workers.
• Native-born workers exhibit limited geographic mobility in response to labor market changes.
• Immigrant populations may influence local labor market dynamics.

Purpose of the Study:

• To examine the geographic responsiveness of low-skilled Mexican-born immigrants to labor demand.
• To assess the impact of immigrant location choices on native low-skilled workers' labor market outcomes.
• To quantify the role of immigrant reallocation in mitigating local labor demand shocks.

Main Methods:

• Leveraging geographic variation in employment losses during the Great Recession.
• Comparing the geographic elasticity of low-skilled immigrants, high-skilled natives, and low-skilled natives.
• Analyzing the impact of Mexican-born population density on native workers' labor market outcomes.

Main Results:

• Low-skilled Mexican-born immigrants display high geographic elasticity to labor demand, exceeding that of high-skilled natives.
• Low-skilled natives in areas with large Mexican-born populations are insulated from local labor demand shocks.
• Immigrant workforce reallocation reduced the impact of demand shocks on low-skilled natives' employment by over 50%.

Conclusions:

• Immigrant location choices serve as a crucial adjustment mechanism in local labor markets.
• The geographic mobility of low-skilled immigrants benefits low-skilled native workers by stabilizing employment.
• Immigration significantly mitigates the adverse effects of economic downturns on vulnerable native populations.